LEXSEE 119 N.Y.

587

James J. Phelan, Appellant, v. Margaret Brady, Impleaded, etc., Respondent

[NO NUMBER IN ORIGINAL]

Court of Appeals of New York

119 N.Y. 587; 23 N.E. 1109; 1890 N.Y. LEXIS 1127

March 3, 1890, Argued

March 21, 1890, Decided

PRIOR HISTORY: [***1] under a perfectly valid but unrecorded

deed. Her title, therefore, prevailed
Appeal of the General Term of the as against the mortgagee. It mattered
Supreme Court in the first judicial not, so far as the occupant was
department, entered upon an order made concerned, that the mortgagee in good
June 19, 1888, which affirmed a faith advanced his money upon an
judgment in favor of defendant, apparently perfect record title of the
dismissing plaintiff's complaint on mortgagor. Nor was it of any
the merits, upon a decision of the consequence whether the mortgagee was
court on trial at Special Term. in fact ignorant of any right or claim
of the occupant to the premises. It
DISPOSITION: was enough that she was in possession
under her deed and the contract of
Judgment affirmed. purchase, as that fact operated in law
as notice to the mortgagee of all her
CASE SUMMARY: rights.

OUTCOME: The court affirmed the

PROCEDURAL POSTURE: Plaintiff judgment of the trial court, which
mortgagee appealed the judgment of the dismissed the mortgagee's action to
General Term of the Supreme Court in foreclose on the mortgage.
the First Judicial Department (New
York), which affirmed the trial CORE TERMS: mortgage, occupied,
court's judgment in favor of tenants, deed, apartment, delivery,
defendants, mortgagor and occupant, rents, contract of purchase, purchase-
dismissing the mortgagee's action to money, purchase-price, housekeeper,
foreclose on the mortgage. fee-simple, default, rented, notice
OVERVIEW: The mortgagee sought to LexisNexis(R) Headnotes
foreclose on a mortgage of a tenement
building. He subsequently learned that
prior to the execution and delivery of
his mortgage, the building had been Criminal Law & Procedure > Sentencing
sold to one of its occupants. The > Corrections, Modifications &
trial court held that the occupant's
Reductions > Eligibility,
title and possession was sufficient to
Circumstances & Factors
defeat any claim under the mortgagee's
mortgage, and dismissed the complaint. Real Property Law > Deeds > General
At the time of the execution and Overview
delivery of the mortgage to the Real Property Law > Financing >
mortgagee, the occupant was in the Mortgages & Other Security Instruments
actual possession of the premises > General Overview
[HN1] Actual possession of real estate
is sufficient notice to a person
proposing to take a mortgage on the
property, and to all the world of the
existence of any right which the
person in possession is able to
establish.
SYLLABUS: Actual possession of real
estate is sufficient notice to all the
world of the existence of any right
which the person in possession is able
to establish.
In an action brought to foreclose a
mortgage upon certain premises given
by M., who held an apparently perfect
record title to the same, it appeared
that before the execution of the
mortgage, M. had conveyed the premises
to B. who was in possession, and, with
her husband, occupied two rooms in the
buildings on the premises; he also
kept a liquor store in a part thereof;
the other rooms she leased to various
tenants, claiming to be the owner, and
she collected the rents. Her deed was
not recorded until after the giving of
the mortgage. Held, that B.'s actual
possession under her deed, although
unrecorded, and its existence unknown
to the plaintiff, was sufficient
notice to him of her rights to defeat
any claim under [***2] the mortgage.
Also, held, that the fact B. and her
husband occupied the store and a
living apartment in the building prior
to the time she went into possession
under her contract of purchase could
not aid the plaintiff.
The nature of the action and the
facts, so far as material, are set
forth in the opinion.
COUNSEL:
N. B. Hoxie for appellant. The
plaintiff had not constructive notice
of defendant's claim. ( Williamson v.
Brown, 15 N. Y. 362, 364; Pope v.
Allen, 90 id. 298, 303; Cooke v.
Travis, 20 id. 400; Staples v. Fenton,
5 Hun, 172; 3 Wash. on Real Prop. 317;
Claiborne v. Holmes, 51 Miss. 146;
Billington v. Welch, 5 Binney, 129;
Page v. Waring, 76 N. Y. 463, 471;
Chesterman v. Gardener, 5 Johns. Ch.
29; Grinstone v. Carter, 3 Paige, 421;
Webster v. Van Steenbergh, 46 Barb.
212.)
William E. Wyatt for respondent.
The defendant Margaret Brady's
possession and occupation under a
deed, though unrecorded, was notice as
to her ownership of the property.
(Gerard on Real Estate, 593, 594;
Goveneur v. Lynch, 2 Paige, 300; Bank
of Orleans v. Flagg, 3 Barb. 318;
Tuttle v. [***3] Jackson, 6 Wend.
213; Moyer v. Hinman, 13 N. Y. 184;
Trustees, etc., v. Wheeler, 61 id. 88-
98; Cavalli v. Allen, 57 id. 517;
Chesterman v. Gardner, 5 Johns. Ch.
39; Territt v. Cowenhoven, 11 Hun,
320; Troup v. Hurlbut, 10 Barb. 354;
Smith v. Jackson, 76 Ill. 254; Greer
v. Higgins, 20 Kan. 420; Brown v.
Volkening, 64 N. Y. 76-83; Page v.
Waring, 76 id. 463-470; Seymour v.
McKinstry, 106 id. 230-238; Robinson
v. Wheeler, 25 N. Y. 260; People v.
Snyder, 41 id. 402; Seymour v. Van
Slyck, 8 Wend. 403, 404; Sharder v.
Bunker, 65 Barb. 608; Brown v. Austin,
30 id. 358; Ernest v. Reed, 49 id.
367; Tracy v. Snowden, 23 Wkly. Dig.
41; Moyer v. Hinman, 13 N. Y. 184;
Merithew v. Andrews, 44 Barb. 200; 2
Pomeroy's Eq. Juris. 665.) The fact
that the property in question is a
tenement-house, has no proper bearing
on the question, and cannot change the
rule. ( Page v. Waring, 76 N. Y. 470;
Crosland v. M. S. F. Assn., 121 Penn.
St. 82, 83; Brown v. Volkening, 64 N.
Y. 84; De Ruyter v. Trustees, etc., 2
Barb. [***4] Ch. 556; 2 Pomeroy's
Eq. Juris. 665.) The defendant was
guilty of no negligence. ( Seymour v.
McKinstry, 106 N. Y. 230.) The
defendant being in actual possession
under a deed covering the premises,
and claiming under a specific title
adversely to John E. Murphy,
plaintiff's mortgagor, the mortgage
under the Revised Statutes is void. (
Fish v. Fish, 39 Barb. 13; Cary v.
Goodman, 22 N. Y. 174; Bradstreet v.
Clarke, 12 Wend. 675; Christie v.
Gage, 71 N. Y. 189.)
JUDGES:
O'Brien, J. All concur.
OPINION BY:
O'BRIEN
OPINION:
[*589] [**1110] On the 23d day
of July, 1886, the plaintiff loaned to
the defendant John E. Murphy the sum
of $ 2,000, and took from him his
bond, whereby he promised to pay the
same with interest semi-annually in
two years thereafter. On the same
day, and as collateral security for
the payment of the bond, Murphy and
his wife executed, acknowledged and
delivered to the plaintiff a mortgage
upon certain real estate in the city
of New York. The premises thus
mortgaged consisted of a tenement
building, or block, containing forty-
three rooms or apartments, then
occupied by twenty different occupants
or families, as tenants from month
[***5] to month, except that three of
these apartments were occupied by the
defendant Margaret Brady and her
husband, who kept a liquor store in
part of the building, and they
occupied two living rooms in the rear
of the store, the wife claiming to be
the owner of the premises and
collecting rents from the other
tenants.
The plaintiff, at the time he made
the loan, had no actual notice or
knowledge of any title to the premises
in Mrs. Brady, or any claim on her
part to be the owner. When the first
installment of interest became due
upon the mortgage, default was made,
and the plaintiff brought this action
to foreclose under a provision in the
mortgage making the whole sum due upon
default in the payment of the interest
when due. Margaret Brady being in
possession was made a party to the
action, [*590] and she answered,
setting up the defense that prior to
the execution and delivery of the
plaintiff's mortgage, and on or about
the 5th of May, 1886, she became the
absolute owner in fee-simple of the
premises described in the complaint
and in the mortgage and of the whole
thereof, and that upon becoming such
owner, she took possession of the
same, and that she has ever since
continued [***6] in actual, open and
notorious occupation and possession of
the premises as such owner, and has
ever since and still owns the same in
fee-simple.
The trial court found that in
March, 1886, Margaret Brady employed
one Michael J. Murphy, an attorney, to
examine the title to the premises in
question and purchase the same for
her, and before May 7, 1886, she gave
said Murphy, as her attorney, the sum
of $ 6,700 to be used as part of the
purchase-money; that Murphy procured a
contract for the sale of the premises
to be made between Mary S. Trimble,
who then owned the same, and his son
John E. Murphy the defendant, in which
contract the said John E. Murphy
appeared to be the purchaser of the
premises; that upon the execution of
this contract, about March 19, 1886,
Michael J. Murphy paid to Mrs. Trimble
part of the sum of $ 6,700, which he
had received for that purpose from
Mrs. Brady, and the rest of that sum
was paid to her on the 7th of May,
1886; that the balance of the
purchase-price, namely $ 16,000, was
secured to be paid to Mrs. Trimble by
a purchase-money mortgage; that on the
same day the purchase-price was thus
paid, Mrs. Brady's lawyer took from
Mrs. Trimble a deed of the premises
[***7] to his son John E. Murphy, and
the deed was duly recorded on that
day; that on the 1st of May, 1886,
Mrs. Brady took possession of the
premises under the contract claiming
to own the same, and has ever since
remained in possession and occupied
the same herself and by her tenants;
that she rented certain rooms in the
building to tenants immediately
thereafter; that she discharged the
housekeeper who had before that date
rented the premises and collected the
rents for Mrs. Trimble, and moved
herself into the rooms formerly
occupied by the housekeeper, and that
she has received the rents ever since
the 1st [*591] of May, 1886; that on
the fifth of May of that year a deed
conveying the premises to Mrs. Brady
was executed and duly acknowledged by
the defendant John E. Murphy and his
wife, and by him delivered to his son
Michael J. Murphy as agent and property situated as this was,
attorney for Mrs. Brady; that Murphy occupied by numerous tenants, it would
never had any interest in the be inconvenient and difficult for him
premises, never paid any part of the to ascertain the rights or interests
consideration money and never had that are claimed by all or any of
possession of the same or any part them. But this circumstance cannot
thereof; that the said Michael J. change the rule. [HN1] Actual
Murphy retained the deed to Mrs. Brady possession of real estate is
in his possession until not later than sufficient notice to a person
the 25th of August, 1886, when he proposing to take a mortgage [*592]
delivered the same [***8] to her and on the property, and to all the world
the same was recorded by her on the of the existence of any right which
26th of August, 1886, subsequent to the person in possession is able to
the execution, delivery and record of establish. ( Governeur v. Lynch, 2
the plaintiff's mortgage. Paige, 300; Bank of Orleans v. Flagg,
3 Barb. 318; Moyer v. Hinman, 14 N. Y.
The trial court held that Mrs. 184; Tuttle v. [**1111] Jackson, 6
Brady's title and possession was Wend. 213; Trustees of Union College
sufficient to defeat any claim under v. Wheeler, 61 N. Y. 88, 98; Cavalli
the plaintiff's mortgage, and v. Allen, 57 id. 517.)
dismissed the complaint, and this
judgment has been affirmed by the The circumstance that Mrs. Brady
General Term. and her husband occupied the store and
a living apartment in the building
At the time of the execution and prior to the time that she went into
delivery of the mortgage to the possession under her contract of
plaintiff, the defendant Mrs. Brady purchase as tenants under Mrs.
was in the actual possession of the Trimble, the then owner, cannot aid
premises under a perfectly valid but the plaintiff. It does not appear
unrecorded deed. Her title must, that he ever heard of that fact till
therefore, prevail as against the after the commencement of this suit,
plaintiff. It matters not, so far as and we cannot perceive how it would
Mrs. Brady is concerned, that the affect the result if he had. The
plaintiff in good faith advanced his trial [***10] court found that prior
money upon an apparently perfect to making the loan the plaintiff was
record title of the defendant John E. upon the premises for other purposes,
Murphy. Nor is it of any consequence, and that then, by making inquiry, he
so far as this question is concerned, could have ascertained the rights of
whether the plaintiff was in fact Mrs. Brady in the property, and while
ignorant of any right or claim of Mrs. the absence of such a finding would
Brady to the premises. It is enough not change the result, it shows that
that she was in possession under her the plaintiff's loss is to be
deed and the contract of purchase, as attributed to his confidence in
that fact operated in law as notice to Murphy, who probably deceived him, and
the plaintiff of all her rights. to his failure to take notice of Mrs.
It may be true, as has been argued Brady's possession.
by the plaintiff's counsel, that when The judgment should be affirmed,
a party [***9] takes a conveyance of with costs.